Global ESG Regulations — Overview for 2024.

As we get stuck into 2024, lets recap the global ESG regulations to pay attention to. There’s a lot to keep track of — if you know of others let us know in the comments!

Corporate Sustainability Reporting Directive (CSRD):

🇪🇺 Targets large EU companies and non-EU companies with significant EU activity.

📊 Expands non-financial reporting, covering ~50,000 entities.

EU Deforestation Law (EUDR):

🌲 Legislation to curb the EU’s contribution to global deforestation.

🚫 Prohibits EU sales and exports of commodities associated with deforestation. Starting with:

• Cattle (including but not limited to live cattle, beef, raw hides and leather)
• Cocoa (including but not limited to cocoa butter, cocoa powder and chocolate)
• Coffee
• Palm oil
• Soya
• Rubber (including but not limited to rubber sheets, conveyor belts, rubber tyres and rubber clothing)
• Wood (including but not limited to particle board, plywood, sawdust, packing cases, casks and barrels, and wooden furniture).

Corporate Sustainability Due Diligence Directive (CSDDD):

🇪🇺 Targets large EU and non-EU companies with substantial European Union undertakings.

🌐 To ensure businesses address the adverse impacts throughout their global value chains.

EU’s “Fit for 55” and European Climate Law:

🇪🇺 Aims to reduce EU greenhouse gas emissions by 55% by 2030, achieve climate-neutrality by 2050.

EU Taxonomy for Sustainable Activities:

📊 Disclosures required in line with NFRD/CSRD and SFDR reporting requirements.

🤝 Helps companies and investors make sustainable investment decisions.

Sustainable Finance Disclosure Regulation (SFDR):

📈 Targets investors and financial market participants.

💹 Aims to make the sustainability profile of funds more comparable.

Carbon Border Adjustment Mechanism (CBAM):

🌐 Landmark tool to fight carbon leakage in the EU.

🛑 Affects companies trading products subject to carbon costs.

Sustainability Disclosure Requirements (SDR) — UK Financial Conduct Authority (FCA):

🇬🇧 Targets FCA-regulated firms such as asset managers or owners.

🌿 Aims to improve sustainability information for consumers, addressing greenwashing.

Streamlined Energy and Carbon Reporting (SECR) 🇬🇧 UK Government:

🇬🇧 Targets large enterprises, publicly listed companies, and LLPs.

💡 Requires disclosure of energy consumption and carbon emissions.

US Federal Supplier Climate Risks and Resilience Rule:

🇺🇸 Focus on enhancing climate resilience in federal supply chains.

📊 Requires suppliers to assess, disclose, and mitigate climate-related risks.

SEC’s Proposed Climate-Related Disclosures:

🇺🇸 SEC registrants required to include climate-related information in reports.

Global Initiatives informing regulations:

Task Force on Climate-Related Financial Disclosures (TCFD) — now disbanded, taken over by IFRS & International Sustainability Standards Board (ISSB):

📈 An initiative to establish a global baseline for sustainability reporting standards under the International Financial Reporting Standards (IFRS).

🌍 Aims to provide consistent and comparable sustainability information for investors and stakeholders.

📊 Applicable to companies globally, promoting harmonized reporting practices.

Task Force on Nature-related Financial Disclosures (TNFD):

🌐 A global initiative similar to TCFD, but focuses specifically on nature-related risks and opportunities.

🌿 Aims to encourage companies to disclose and address their dependencies and impacts on nature.

📊 Applicable to companies worldwide, emphasizing the importance of biodiversity and ecosystem services.

Science-Based Targets (SBTi):

🌐 A global initiative encouraging companies to set emission reduction targets in line with climate science.

📉 Targets are considered “science-based” if they are in alignment with keeping global warming well below 2 degrees Celsius.

📊 Applicable to companies worldwide, across various industries.

Science-Based Targets for Nature (SBTN):

🌿 An extension of SBT, focusing on conservation and biodiversity.

🦋 Encourages businesses to set targets that contribute to the preservation of ecosystems and biodiversity.

🌍 Relevant for companies with significant impacts on natural resources and ecosystems.

CDP:

📋 Popular voluntary reporting framework for companies.

🤝 EFRAG and CDP are collaborating to accelerate the market uptake of the European Sustainability Reporting Standards (ESRS), part of CSRD.

Global Biodiversity Framework (GBF):

🌿 An international effort under the United Nations Convention on Biological Diversity (CBD) to address biodiversity loss.

🌍 Aims to establish targets and frameworks for the conservation and sustainable use of biodiversity.

📊 Applicable globally, particularly relevant for industries impacting biodiversity and ecosystems.

The outlined regulations signify a global shift towards a sustainable future. Companies need to navigate these regulations to align with ESG goals and contribute to a more environmentally conscious and socially responsible business landscape. For carbon and nature accounting of supply chains, LandGriffon is here to help. Contact us now!